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KERN RIVER GAS TRANSMISSION COMPANY

KERN RIVER GAS TRANSMISSION COMPANY. Wyoming Pipeline Authority Casper, Wyoming August 21, 2007 John Dushinske Vice President of Marketing & Regulatory Affairs. KERN RIVER OVERVIEW. Based in Salt Lake City 1,680 miles 1.76 Bcf/d design capacity Access to Rocky Mountain basins

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KERN RIVER GAS TRANSMISSION COMPANY

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  1. KERN RIVER GAS TRANSMISSION COMPANY Wyoming Pipeline Authority Casper, Wyoming August 21, 2007 John Dushinske Vice President of Marketing & Regulatory Affairs

  2. KERN RIVER OVERVIEW • Based in Salt Lake City • 1,680 miles • 1.76 Bcf/d design capacity • Access to Rocky Mountain basins • Markets in Utah, Nevada and California

  3. KERN RIVER SYSTEM Kern River original build • In-service February 1992 • 724,500 Dth/d California Action Plan / 2002 Expansion Projects • In-service July 2001/May 2002 • 124,500 Dth/d Kern River 2003 Expansion Project • In-service May 2003 • 906,626 Dth/d

  4. SYSTEM ACCESSIBILITY System design capacity is 1.76 Bcf/d Average daily throughput in 2007 is 2.147 Bcf Receipt point capacity is 5.45 Bcf/d • 3 x system design capacity • 2.5 Bcf/d of new receipt point capacity added since 2003 Expansion Project Delivery point capacity is 7.33 Bcf/d • 4 x system design capacity • 1.4 Bcf/d of new delivery point capacity added since 2003 Expansion Project

  5. SUPPLY AREA INFRASTRUCTURE

  6. SYSTEM UTILIZATION Percent • Kern River ranked #2 in load factor of 28 major interstate pipelines(Source: Fosters Financial Reports) • Kern River ranked #4 out of 41 interstate pipelines in 2007 MastioGale Survey(Source: MastioGale)

  7. KEY MARKETS Power Generation • Since 2001, 8,000 MW directly connected to Kern River Peak load requirement of 1.55 Bcf/d • Service to another 18,000 MW behind local distribution companies Peak load requirement of 3.4 Bcf/d Local Distribution Companies • Kern River serves the Southern California Gas, Pacific Gas & Electric, and Southwest Gas natural gas utilities Daily average requirement of 5.16 Bcf

  8. KEY MARKETS cont. Industrial • Kern River serves the enhanced oil recovery/cogeneration markets Daily average requirement of .480 Bcf Other Markets • Kern River serves the Phoenix market via El Paso’s Line 1903

  9. 4 14 13 12 5 1 2 3 4 7 9 6 8 3 9 6 8 5 1 7 14 13 10 11 12 11 KEY MARKETScont. Power Plants and Interconnects POWER PLANTS In-service since 2001 PROJECT MW Sunrise (Edison Mission) 585 El Dorado (Sempra) 480 L.V. Cogen (Black Hills) 280 West Valley (PacifiCorp) 170 La Paloma (Complete Energy) 1,125 Apex (LS Power) 550 High Desert (Tenaska) 830 Silverhawk (Nevada Power) 570 Bighorn (Reliant) 570 Pastoria (Calpine) 750 Chuck Lenzie (Nevada Power) 1,200 Harry Allen (Nevada Power) 160 NCA 1 & 2 (NV Cogen Ass.) 170 Lake Side (PacifiCorp) 535 TOTAL MW 7,975 Daggett (PG&E) Kramer Jct. (SoCalGas) 2 Mojave Pipeline 10 El Paso South System Wheeler Ridge (SoCalGas) Phoenix Ehrenberg Dag Moj (El Paso)

  10. INCREASING MARKET SHARE IN CALIFORNIA 2001 2006 • Kern River is the largest transporter of natural gas to California, providing 26% of the average daily demand (Source: 2006 California Gas Report and California Energy Commission) • Kern River Ranked #1 in growth over last five years of 28 major interstate pipelines (Source: Fosters Financial Reports)

  11. 2010 EXPANSION PROJECT • Market signals are now strong to proceed with an expansion • Rockies gas supply will exceed export capacity • Anticipate rolling-in costs and utilizing the 2003 expansion rates

  12. MARKET ASSESSMENT The expansion will be supported by: • Natural gas and electric utilities • Merchant power generators • Rocky Mountain natural gas producers

  13. SIGNALS ARE STRONG • Core market demand is growing in states served by Kern River – 360,000 Dth/d by 2010 • Markets seeking supply diversity • 9,200 MW in development – 1.78 Bcf/d peak load • Power plants lacking firm transportation capacity. 2,500 MW – .420 Bcf/d peak load • Rocky Mountain production is projected to outpace export pipeline capacity • Limited availability of LNG supply

  14. CALIFORNIA UTILITIES’ DISTRIBUTION OF INTERSTATE PIPELINE CAPACITY Rockies Permian /San Juan Permian /San Juan Canadian

  15. PRODUCTION WILL EXCEED REGIONAL DEMAND AND EXPORT CAPACITY Source: Lippman Consulting, Inc., “Forecast Model,” July 17, 2007; “Rocky Mountain Average Regional Demand 2006,” April 2007; and “Rocky Mountain Region Export Capacity Report,” May 2007.

  16. MARKETING CAMPAIGN • Rationalize 94,000 Dth/d of available capacity and any unwanted shipper capacity • Solicit shipper support for 200-500 MMcf/d of incremental expansion capacity • Seek agency support for utilities to enter into long-term contracts • Finalize precedent agreements by mid-March 2008

  17. 2010 EXPANSION PROJECT OVERVIEW • Economically expand between 200 and 500 MMcf/d • Close the Las Vegas and North Salt Lake loops • Incremental compression • Requires long-term commitments • Open Season – Fall 2007 • In-service – Fall 2010 Opal Salt Lake City Loops Salt Lake City Las Vegas Bakersfield Los Angeles Compressors Original Mainline 2003 Loop Line

  18. KERN RIVER PROVIDING MARKET ACCESS TO ROCKIES PRODUCTION

  19. Questions?

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